Background: The new agreement between Australia and Israel

The new R&D agreement signed during the visit of Israeli Prime Minister Benjamin Netanyahu to Australia between the Israeli government and the federal administration in Australia is expected to strengthen economic ties between the two countries and enable companies from Israel and Australia to receive funding for joint projects in research and development.

David Maimon, President of EL AL, Prime Ministers Benjamin Netanyahu and Malcolm Turnbull and Gareth Evans CEO Qantas International

This agreement comes in addition to existing cooperation agreements with Australian states – one with Victoria and another with New South Wales.

The entities in charge of the agreement are the Israel Innovation Authority (formerly the Office of the Chief Scientist) and the Department of Industry, Innovation and Science in Australia.

“The agreement constitutes a landmark in deepening ties between Israel and Australia,” said Avi Luvton, director of the Asia Pacific Department at the Israel Innovation Authority. “Programs like this, enabling the private sector to receive financial support for joint projects, are significant for promoting cooperation on innovation. Until today, we have operated cooperation programs with the State of Victoria and New South Wales, but we are proud to expand our plans to the federal level via this agreement enabling support for joint projects between Israeli companies and companies from all across Australia.”

Ethy Levy

The Israel Trade Commissioner to Australia, Ethy Levy, who has worked tirelessly to promote the agreement, said she was certain the federal industrial R&D agreement will contribute significantly to the quality of cooperation between the two countries.

Over the past two years, there has been significant development in trade ties between Israel and Australia as part of the recognition that Israeli innovation has much to contribute to Australian industry. As part of its innovation program, Australia has opened five international centres to bolster its innovation ecosystem. The first one announced by the Australian Prime Minister is the “Landing Pad” in Tel Aviv.

More than 30 Australian business delegations visited Israel in 2016, including delegations from leading Australian companies that have recognised that Israeli innovation and technological development can constitute engines of growth for them.

An interesting phenomenon that may significantly strengthen economic ties between the countries is the listing of Israeli technology companies on the Australian stock exchange.

Over the past year, nine Israeli companies held public offerings on the Australian stock market (ASX) and today 12 Israeli companies or companies with R&D activity in Israel are traded there, putting Israel in sixth place among foreign countries with companies traded there. Most of these Israeli companies have raised far more capital than they expected and these results may encourage additional Israeli companies to consider this route. There are currently 15 companies considering issuing on the ASX and the assessment is that at least three of them will offer in the coming months. In light of this development, a visit by the directors of the ASX to Israel is expected to take place in Q2 of 2017.

Over the past two years there has been a significant rise in economic activity between the two countries and more than 20 Israeli companies now have representation in Australia or have expanded their personnel stationed in the country.

Bilateral trade between Israel and Australia, as expressed in import and export, comes to $1.1 billion annually (2016). However, this data does not reflect the real scope of trade. Most Israeli companies active in Australia supply IT services, among them many companies active in cyber-security. Since service exports are not expressed in customs reports and in import/export reports, and since a significant amount of Israeli exports to Australia are carried out through third parties like the U.S., Singapore or European countries, we estimate that the scope of trade is closer to $2 billion.

Over the past year, several Israeli companies have won significant tenders in Australia and we expect these to be expressed in the trade data in the coming years.

Source: Data From the Israeli Ministry of Economy and Industry: Australia – A Survey of Relations in Trade and R&D

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